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The Consumer Price Index eased 0.1% during December
following no change in November. The 0.7% twelve-month increase compared to 0.8%
during 2014 as inflation during both years was held in check by lower energy
costs. Prices excluding food & energy improved 0.1%, following three months
of 0.2% gain. The 2.1% rise versus last December was, however, the quickest
increase since 2011. No change in the total CPI and a 0.2% rise in core prices
were expected in the Action Economics Forecast Survey.

Lower energy prices provided the downward pressure on prices during the year
with a 2.4% monthly decline (-12 .6% y/y) in December alone. It was powered by a
19.7% y/y drop in gasoline prices to the lowest level since April 2009.
Lower fuel oil prices added to the decline with a 31.4% drop over the course of
the year. Natural gas prices followed with a 14.9% y/y fall and electricity
prices were off 1.2% y/y.

A 0.2% increase (2.9% y/y) in core services prices followed three consecutive
months of 0.3% rise. The firm gains lifted the twelve month gain to 2.9% which
was the strongest since 2007. Shelter prices rose 3.2% y/y after a 2.9% increase
in 2014. This was the quickest rise since 2007. It was paced by an accelerated
3.7% gain in rents of primary residences and a 3.1% rise in owners equivalent
rent of primary residence. Medical care services prices rose 2.9% y/y, up from
2.4% in 2014. Recreation services cost increases accelerated to 2.5% y/y versus
1.5% a year earlier. Public transportation prices fell 1.0% y/y after a 2.9%
decline in 2014.

Core goods prices eased 0.1%, the eighth monthly decline of the year. A
second straight 0.6% decline (-2.9% y/y) in recreation goods prices paced last
month's weakness. Prices for video & audio products fell 7.3% y/y. That was
followed by a 0.2% fall (-0.9% y/y in apparel prices, led by a steady 0.6% drop
(-2.2% y/y) in women's clothing prices. New vehicle prices edged 0.1% lower
(+0.2% y/y), but they rose a quicker 0.6% during the whole year. Medical care
goods prices eased 0.1% last month (+1.5% y/y). That twelve month rise was down
from 4.8% in 2014, but the full year increase of 3.3% was the quickest since
2000. Appliance prices improved 0.2% in December after a 1.3% fall. The 3.4% y/y
decline added to sharp declines in the prior two years. Household furnishings
& supplies prices gained 0.1%, but they were down for the third straight year.

Food prices eased 0.2% (+0.8% y/y) after a 0.1% slip. Lower prices for meats,
poultry, fish & eggs (-3.4% y/y) provided much of the downward pressure but
that followed a 9.2% surge in the prior year. Dairy prices followed the same
pattern as a 3.9% decline followed a 5.3% rise. Cereal & bakery product
prices rose 1.0% for the year after a 0.5% rise in 2014. Fruit & vegetable
prices gained 0.6% and added to a 3.2% rise. Nonalcoholic beverage prices
increased 0.3% for the year but the cost of eating out jumped 2.6%, strong for
the fifth consecutive year.

The consumer price data is available in Haver's USECON database while
detailed figures can be found in CPIDATA. The expectations figure is from
Action Economics and is found in the AS1REPNA database.

Are Long-Term Inflation Expectations Declining? Not So Fast, Says Atlanta
Fed from the Federal Reserve Bank of Atlanta can be found here.